GBPJPY—coiling

GBPJPY is coiling within a symmetrical triangle and is reaching a point where it should break out. It's getting too small within it to make a worthwhile trade so waiting for the break, up or down, is probably the wiser course of action. Expect fake-outs before a definitive break but given the overall trend from December of last year it's will most likely resume its downtrend. Ideal would be a break downwards and then a retest of the break line. If it started to falter again one could go short with a stop just above the break line (accounting for the daily volatility of this pair). An alternative trade is to wait for a rally back to the upward trend line and to short at that level or just above. If it does begin to move down, price targets below 125.40 are probable.

I shouldn't have to say that this pair is extremely volatile and often stops have to be too wide to make it worth trading for beginning traders. Everyone thinks they can handle it but they find out they can't. So you need to wait until you're in a position to have a tight stop.

Here's the three-hour chart:











© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.